Members Only | December 28, 2021 | Reading Time: 5 minutes

Let them eat debt

That canceling student debt would be a massive transfer payment is a statement that the government should do more for average families.

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The Biden administration had been debating whether to restart federal student loan payments. Payments had been paused because of the pandemic in March 2020 and were scheduled to begin again in February. The moratorium was extended Wednesday until May.

The looming sunset on the moratorium had led to renewed calls to simply forgive federal student loans altogether. Biden has forgiven debts for people with permanent disability and for students defrauded by for-profit colleges in accordance with preexisting federal programs. 


Students who want to go to college can expect to repay loans for years or decades. Education in that context is not a way to enrich lives or promote human flourishing. It’s a high-stakes gamble. 


During the 2020 campaign, though, Biden promised to forgive $10,000 in loans for hundreds of thousands of borrowers. He has not kept that promise. Senator Elizabeth Warren and Senate Majority Leader Chuck Schumer called for $50,000 in loan forgiveness for all federal borrowers, which they argued Biden could do without even asking Congress. But he hasn’t done that either.

Republicans and even many Democrats opposed broad student loan forgiveness on grounds that it’s unfair. They argue that people who have already responsibly paid off their loans won’t benefit – which is a bit like arguing that fixing roads is unfair to those who have just moved out of town. A more reasonable concern is that people who have debt are wealthier and more privileged than those who don’t, so that debt forgiveness is essentially a regressive redistribution of wealth. 

But the claim that forgiving debt is a giveaway to elites doesn’t hold up. Worse, framing debtors as immoral and undeserving plays into talking points about scarcity and the undeserving, profligate poor that make it harder to pass any progressive legislation. Opposing student debt makes it harder, not easier, to advance programs for the needy.

Brookings’ Adam Looney makes the strongest good faith case for deprioritizing debt forgiveness. Debt relief is very expensive. Forgiving all student debt would cost about 1.6 trillion; $50,000 forgiveness would cost $1 trillion; and $10,000 would cost about $375 billion. 

The $50,000 forgiveness would be about what the government has spent on Supplemental Social Security Income since 2000. It’s twice as much as the government has spent on Pell Grants since 2000, which are awarded to low and middle income undergraduates. In contrast, Looney says, the median income of houses with student loans is $76,400. 


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“In terms of demographics and educational attainment, households with student debt largely mirror the characteristics of households in the population at large, except they are better educated” he said. That means people with loans are overall better-off and whiter than people who receive transfer payments more targeted at poorer families.

Andre M. Perry, Marshall Steinbaum and Carl Romer, also at Brookings, point out flaws in the argument. Because of the racial wealth gap, Black households carry far more debt than white ones. Four years after college, Black graduates owe $52,726 on average while white graduates owe $28,006 on average. That means if you eliminate all debt, the average Black graduate with debt will be $52,000 richer and the average white graduate with debt will only be $28,000 richer. 

It won’t eliminate the racial wealth gap. But it would help.

Along the same lines, Perry, et. al, point out that debt elimination would be progressive, not regressive, because the policy should be evaluated relative to income, not in dollar amounts. Sales taxes tend to take more money from wealthy people because wealthy people buy more stuff. But sales taxes are nonetheless regressive taxes, because poorer people have to spend a larger share of their income to pay them. 

Poor families’ loan debts are huge compared to household wealth. But loans are a negligible percentage of wealth for high-income families. As a result, “canceling student debt would make the income and wealth distributions more egalitarian and nearly eliminate negative net worth households from the wealth distribution,” the authors said. “That is the definition of a progressive –not regressive – program.”


The claim that forgiving debt is a giveaway to elites doesn’t hold up. Worse, framing debtors as immoral and undeserving plays into talking points about scarcity and the undeserving, profligate poor that make it harder to pass any progressive legislation. Opposing student debt makes it harder, not easier, to advance programs for the needy.


More broadly, if we take Looney’s frame, and set up an either/or choice between debt forgiveness and other transfer payments like Social Security or housing assistance, progressives have already lost. When it comes to defense and transfer payments to the rich, conservatives and moderates always seem to come up with infinite money. But when it comes to helping average people, we have to choose between education and freezing on the street? 

The fact that canceling student debt would be a massive transfer payment isn’t a bug. It’s a feature. It’s a statement that the government should do more – much more – for average families. It’s a statement that education should be for everyone, not just for the wealthy.

Since 2011, funding for public education has plummeted; in 2018, state funding was $6.6 billion below what it was in 2008, just before the Great Recession. Private university tuition has ballooned 144 percent in the past 20 years among universities surveyed by USA Today. In-state public school tuition has risen by 211 percent. Student debt has also metastasized, growing more than 100 percent in the past 10 years. 

Students who want to go to college can expect to repay loans for years or decades. Education in that context is not a way to enrich lives or promote human flourishing. It’s a high-stakes gamble. 

“This forces us to think very narrowly about education,” activist Astra Taylor told Vox. “If you’re young and want to think about how best you can contribute to society, if you want time to pursue your curiosities, you think, ‘Well, damn, I can’t do that because I have to be pragmatic and pay all this debt back.’” Debt turns passion into burden. It makes poets into bankers. Then it encourages us to kick and condemn anyone who dares to say they’d like to value poetry over money.


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We condemn them specifically, because we all know high-stakes gamblers are frivolous foolish elites in need of chastisement. Students are forced to take on huge debt. And then the fact that they have taken on huge debt marks them as immoral and unworthy of relief. 

This is the reactionary logic of hierarchy, which has structured America’s stingy social safety net for decades. It’s the same reasoning West Virginia Senator Joe Manchin used in refusing to support the Build Back Better plan. He said that people receiving a $300 to alleviate child poverty would spend it on drugs. The wealthy (like Manchin) are industrious and so deserve to bathe in government billions. The less well off are all, by definition, undeserving, and can’t be trusted to help their children, or educate themselves. Let them eat debt.

The question isn’t whether the richest country in the history of the world can afford to pay for its people’s education. The question is whether we can afford not to. Debt prevents people from dreaming. It creates a more cramped, more grasping future. By abolishing debt, Biden could help millions of people, and make us a more generous, more dynamic, more equal country. He should do so.


Noah Berlatsky writes about the political economy for the Editorial Board. He lives in Chicago. Find him @nberlat.

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